The double entry bookkeeping system is a group of rules meant for recording the financial information in any financial accounting process in which each event changes or transaction at least two various accounts of nominal edger.

The term double entry book keeping derives from a fact that the financial facts used to be stored by using the pen in the paper books. Thus, it became known as bookkeeping and the books were known as the ledgers and journals and the every transaction which was entered two times with a single side of the transaction is known as the credit and the other is known as the debit.

The equation of accounting serves as the error detection tool. If at any section the sum of the debit does not equal to the corresponding sum of the the credits for every accounts, it would be assumed that something error has taken place. Therefore, it makes sure that the sum of credits or the sum of debits need to be equal in the value.

Entries of accounting:

In double-entry accounting procedure, each entry of accounting records the pairs of the related financial transactions for liability, asset, expense, capital accounts or income. Recording of any amount of debt to any account and an amount of equal credit to other account lead to balancing the the total credits to the total debits in case of every accounts in general ledger. If the entries are recorded without any error, then the aggregate balances of all accounts which have positive balances would be equal to all the aggregate balances of all accounts which have negative balances. Entries of accounting which credit and debit related accounts include typically the same identifying code and date in both the accounts. In case any error happens, each credit and debit can be traced back to the source document of transaction or journal, and can preserve an audit trail. The rules which formulate the the accounting entries are known as the "Golden rules of Accounting."

Approaches of double entry book keeping

There are two approaches to double entry book keeping.; These are: traditional approach and accounting equation approach. Irrespective of approach used, effect on the account books remain same, with the two aspects in every transaction.

• Traditional approach: This approach is classified into three parts, nominal, real and personal accounts. Among these three, the nominal accounts are expenses, revenue, losses and gains; real accounts are the assets and the personal accounts are the owner's equity and liability.
• Accounting equation approach: Under this approach, the records of the transactions are kept based on accounting equation. It is basically a statement of the equality between the credits and debits. These accounts can be of five types: liabilities, assets, revenues/income, losses/capital gains or expenses.